Many small-business owners are worried that they lack adequate funds for retirement. That’s according to a new survey from TD Bank, which found that 26% of owners are not confident that they will have enough savings to retire comfortably.
The anxiety was greater among entrepreneurs from the Baby Boomer generation. Some 28% said they are not very or not at all confident that they will have the necessary capital to retire well. Only 21% of Millennials said the same. An important reason for this could be that, on average, Baby Boomers launched their current businesses at age 43; Millennials jumped into entrepreneurship at an average age of 26, allowing them more time to earn and invest for retirement.
Additionally, the anxiousness over retirement might be, in part, a result of the fact that only about half of owners have a retirement plan in place.
“Smart business operations need to consider the future, including the retirement of the owner,” said Jay DesMarteau, head of small-business banking at TD Bank. “Just as those in the workforce should invest in themselves through retirement savings, business owners need to have conversations about retirement and prepare for the future to ease the transition.”
According to the survey, one-quarter of respondents indicated they will close their business when they retire. Furthermore, 27 of owners who started the company from scratch said they plan to close their business when they retire, compared with only 8% of those who took over an existing business. Overall, 15% of business owners said they would transfer ownership of the business to family or co-workers.
TD Bank’s survey includes input from 667 businesses across the United States. Each company has less than $5 million in revenue and fewer than 100 employees. – CR